The Food Corporation of India (FCI) shot down claims of a massive ₹1,160 crore rice diversion in Madhya Pradesh's ethanol program,saying ongoing probe only involves a suspected diversion valued at ₹5.63 lakh. The agency called the larger figure 'factually incorrect' and 'completely baseless.'
The issue flared up when a truck carrying rice from FCI to an ethanol facility was found at private rice mill in Balaghat district. This spurred authorities to widen their investigation, looking into several ethanol plants, rice mills, and transport vehicles to see if government-supplied rice was misused.
FCI clarified the ₹1,160 crore figure was misleading. It represents legitimate payments made by distilleries for rice,not the value of any alleged diversion. Since the 2024-25 Ethanol Supply Year began, about 5.39 lakh metric tonnes of rice have been allocated to distilleries in Madhya Pradesh. Of this, around 2.98 lakh tonnes were issued at ₹22.50 per kg for 2024-25, and another 2.41 lakh tonnes were supplied at ₹23.20 per kg until June 30,2026.
The inflated figure came from multiplying rice quantities by issue prices, giving a false impression that all the stock was diverted. The real investigation targets alleged diversion of 490 bags of rice,about 242.5 quintals,worth ₹5.63 lakh.
The probe kicked off after officials spotted irregularities in rice shipment to an ethanol unit. When the truck was found at the private mill,a joint inspection by revenue, food,and police officials was launched. Police filed a First Information Report (FIR), and the Madhya Pradesh government set up a Special Investigation Team (SIT) to dig deeper.
Investigators now check records from 22 ethanol plants across 17 districts,along with several rice mills and transport vehicles. They're verifying if subsidized rice meant for ethanol production was used correctly. They examine transport logs,warehouse data, software records, and statements from supply chain players.
As investigation unfolds,multiple arrests have been made, with more suspects identified. FCI noted that its monitoring flagged the alleged irregularities before media reports emerged. After the initial find in early June, notices went to the implicated distillery, and FIR was filed on June 5 .
A follow-up joint inspection by the Department of Food and Public Distribution and FCI linked the recovered rice bags to consignments meant for ethanol program. FCI has since suspended rice allocations to the implicated distillery and withheld its security deposit.
Also, the Department of Food and Public Distribution told National Bank for Agriculture and Rural Development to withhold interest subvention to the involved company. Madhya Pradesh State Civil Supplies Corporation fined the rice mill allegedly tied to the diversion ₹44.12 lakh and blacklisted it.
FCI reiterated the investigation is ongoing and stressed that strict legal action will follow against anyone found guilty once the probe wraps up.
